Cost overrun by Rs. 244 cr of NHPC in Parbati II project: CAG

Shimla: Awarding of contract work to an ineligible entity for the 800 MW Parbati II plant in Himachal Pradesh resulted in cost overrun of about Rs 244 crore for state-run NHPC, a CAG report has said.

The Comptroller and Auditor General (CAG) has said that the hydro power generating company relaxed the Pre Qualification (PQ) criteria after sale of tender documents, regarding the contract awarded to the entity HJV for Parbati II project.

In the report titled ‘Capacity Expansion in Hydro Power Sector by CPSEs (Central Public Sector Enterprises) for the year ended March 2012’, which was tabled in the Parliament on Friday, the top auditor said that NHPC extended undue favour to HJV.

“Due to the award of the work to ineligible contractor by relaxing PQ criteria after sale of tender documents and ignoring the non-fulfillment of eligibility conditions, led to blocking of Rs 182.48 crore besides estimated cost overrun of Rs 243.54 crore and time overrun of 99 months in the project,” CAG said.

HJV was led by Maytas Infra along with Shankaranarayana Construction Company and Nagarjuna Construction Ltd.

After many deliberations, NHPC cancelled the contract of HJV on March 9, 2012.

The investment approval for the proposed 800 MW Parbati II project, in Himachal Pradesh, was given on September 11, 2002 and the approved cost was Rs 3,919.59 crore. The cost estimate was later revised to Rs 5,353.21 crore.

“Finally, as on June 21, 2012, an amount of Rs 182.48 crore was still outstanding, chances of recovery of which were remote,” the report said.

The CAG said that the performance of HJV in the construction of head race tunnel of Parbati-II project was not satisfactory from September, 2002.

“However, instead of cancelling the contract in 2005-06, when its performance was noted as far from satisfactory, NHPC sanctioned (December 2004 to October 2009) advances of Rs 131.65 crore beyond contractual provisions for recommencement of TBM (Tunnel Boring Machine) work, bridging gap and balance work.

“NHPC also deferred the recovery of advances and interest from time to time,” the report said. (PTI)